European Equities: A Busy Economic Calendar and Geopolitics to Drive the Majors

The Majors

It was another mixed day for the European majors on Monday. While the DAX30 slipped by 0.07%, the CAC40 and EuroStoxx600 saw modest gains of 0.35% and 0.15% respectively.

Economic data was on the lighter side, leaving the markets to consider COVID-19 news updates and geopolitics on the day.

From the weekend, news of Oxford University and AstraZeneca’s resumption of COVID-19 vaccine clinical trials supported riskier assets. In the week prior, trials had been suspended due to a patient becoming ill.

The news came amidst another spike in new COVID-19 cases. On Monday, the WHO reported a record daily rise in new infections globally. According to the WHO, the largest increases were reported in India, the U.S, and Brazil.

Europe also reportedly recorded a rise in new cases, raising fears of another wave as the summer draws to a close.

On the geopolitical risk front, U.S and China tensions and Brexit jitters continued to pin back the majors.

As of midnight on Monday, Huawei suppliers were forced to stop supplying Huawei. The U.S administration’s latest move not only impacts U.S suppliers but also non-U.S suppliers that use U.S tech. This deadline had preceded today’s TikTok sale deadline.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Key stats included Eurozone industrial production figures for July.

Industrial production rose by 4.1% in July, following an upwardly revised 9.5% jump in June. Economists had forecast a 4.0% rise.

According to Eurostat,

• Industrial production continued to rise as containment measures were relaxed further in the month.
• Production of capital goods rose by 5.3%, with durable consumer goods up by 4.7%. Intermediate goods production rose by 4.2%, with non-durable consumer goods production rising by 3.9%
• Energy production rose by a more modest 1.1%.
• The highest increases were registered in Portugal (+11.9%), Spain (+9.4%), and Ireland (+8.3%).
• There were decreases in production in Latvia (-0.8%) and Belgium (-0.5%).
• In July 2020 compared with July 2019, industrial production decreased by 7.7%.

From the U.S

There were no material stats to provide the majors with direction late in the session.

The Market Movers

For the DAX: It was yet another mixed day for the auto sector on Monday. Continental rose by 2.61% to buck the trend on the day. Volkswagen fell by 1.23%, with BMW and Daimler seeing losses of 0.56% and 0.64% respectively.

It was also a mixed day for the banks. Deutsche Bank rose by 0.15%, while Commerzbank fell by 1.10%.

From the CAC, it was a bullish day for the banks, after Friday’s pullback. BNP Paribas and Credit Agricole rose by 1.27% and 1.38% respectively. Soc Gen led the way, however, rising by 2.80%.

It was also a bullish day for the French auto sector. Peugeot and Renault ended the day up by 0.75% and by 0.90% respectively.

Air France-KLM ended the day down by 0.22%, while Airbus SE rallied by 3.63%.

On the VIX Index

It was a 2^nd consecutive day in the red for the VIX on Monday. Following on from a 9.56% fall on Friday, the VIX fell by 3.8% to end the day at 25.85.

A bullish day for the U.S equity markets left the VIX in the red. The upside came as the markets responded to the COVID-19 vaccine news from the weekend. Adding to the upside was news of Oracle pipping Microsoft to partner with ByteDance to keep TikTok operational in the U.S.

There were no stats from the U.S to influence on the day.

The NASDAQ rose by 1.87%, with the Dow and S&P500 seeing gains of 1.18% and 1.27% respectively.

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. Key stats include September’s ZEW Economic Sentiment figures for Germany and the Eurozone.

Finalized August inflation figures for France and Italy and Eurozone wage growth figures are also due out but will likely have a muted impact on the majors.

Ahead of the European open, industrial production, fixed-asset investment, and retail sales figures for China will set the tone.

Later in the day, industrial production and NY Empire State Manufacturing Index numbers will provide direction later in the day.

Away from the economic calendar, Brexit and chatter from Beijing and Washington will also be in focus on the day.

The Futures

In the futures markets, at the time of writing, the Dow was down by 8 points.

For a look at all of today’s economic events, check out our economic calendar.